For the second consecutive year, millions of individual taxpayers aren't freaking out about their taxes as April 15 nears. That's because for the second consecutive year, the annual Tax Day has been postponed. But still, some folks are crashing right about now to get their 2020 filings done. That's because the Internal Revenue Service decision to move Tax Day 2021 from mid-April to May 17 applies only to individuals who must file income tax returns, aka the IRS' 1040 forms series. And some of these still have an April 15 deadline if they must pay estimated taxes for the 2021... Read more →
It's likely to be déjà vu all over again for IRS Commissioner Charles Rettig, testifying here in March before a House tax panel, when he goes before the Senate Finance Committee on Tuesday, April 13. Not to get your tax deadline hopes up too much, but Internal Revenue Service Commissioner Chuck Rettig is testifying tomorrow, April 13, before the Senate Finance Committee (SFC). The The last time he talked to lawmakers, it was in March to Representatives on the Ways and Means (W&M) Oversight Subcommittee. It was then that Rettig put the kibosh on the possibility that the IRS would... Read more →
U.S. Treasury Secretary Janet Yellen elaborated on the Biden Administration's fiscal year 2022 budget request for the IRS. (U.S. Treasury photo via Facebook) The White House last week kicked off the fiscal year 2022 budget process by sending a letter to the House Appropriations Committee chairman and issuing a press release on President Joe Biden's funding priorities. The official 2022 discretionary budget request announcement lists 11 areas that also got attention during the presidential campaign, such as education, medical research, housing, and civil rights. In addition to the information issued by 1600 Pennsylvania Avenue, Treasury Secretary Janet Yellen also elaborated... Read more →
Sometimes it's worth the extra time and effort to file an amended tax return. In its regular email to tax professionals last week, the Internal Revenue Service remined them that their clients who filed 2020 returns before the American Rescue Plan Act (ARPA) excluded a portion of unemployment from tax don't need to file amended returns. The IRS says it will recalculate the tax liability of these filers, taking into account the tax they paid on $10,200 per person in unemployment benefits before ARPA's March 11 enactment date. If the early-filing taxpayers are due a refund, the IRS will automatically... Read more →
If it feels like you just filed required federal forms about your overseas financial holdings, you're probably right. Last year, as we all were working to adjust to the myriad tax (and life) changes precipitated by the COVID-19 pandemic, lots of tax deadlines got pushed back. Some way back. One of those was the filing extension for Form 114, Report of Foreign Bank and Financial Accounts, usually referred to as FBAR. Some individuals didn't have to submit this document until Dec. 31, 2020. Now FBAR filers are facing a new deadline. Next week. On Thursday, April 15. That's right. The... Read more →
UPDATE, Friday, April 9, 2021: Rep. Lloyd Smucker (R-Pennsylvania) has introduced H.R. 2437, a bill that would postpone the due date for first-quarter 2021 estimated tax payments to May 17, 2021. Thanks to the San Diego CPA firm GPW for the tip via Twitter, along with the observation that if Smucker's bill does pass, it likely will be very close to the filing wire. The Internal Revenue Service has dashed hopes that it would true-up 2021's annual tax filing deadline and the year's first estimated tax payment. Many in the tax community had been hoping (and lobbying and complaining and... Read more →
Photo: RODNAE Productions via Pexels April 7 is National No Housework Day. I didn't realize that until #TaxTwitter pal Joe Kristan noted it at the end of his Eide Bailly LLP tax roundup blog post today. In my defense, I overlooked No Housework Day because that's basically every day for me. Oh, I do some household chores, but grudgingly. And I'm lucky. The hubby is a more diligent cleaner than I. That means we don't (so far) have a paid housekeeper. But some folks do. And depending on the arrangement, those who hire household help have some tax tasks to... Read more →
May 17 is the deadline this year to file your 2020 tax return and pay any tax you owe. It's also the last day that 1.3 million people can claim their portion of more than $1.3 billion in taxes they overpaid during 2017 but never collected as tax refunds. If you're one of those non-filers, you need to file that 2017 return and claim your refund by May 17. Federal law says that if a taxpayer doesn't file an old return within three years of its original due date — and that was April 15, 2018 for those 2017 tax... Read more →
While the Internal Revenue Service is working on recalculating taxes paid on unemployment benefits by early filers, other taxpayers are dealing with potential tax bills on money they didn't get. They are victims of unemployment insurance fraud. And their numbers increased last year as millions of people filed for the jobless assistance in the wake of the COVID-19 pandemic. To help people dealing with unemployment identity theft, the Department of Labor (DoL) has launched a new website. Alerted by mail: Many don't learn that unemployment benefits have been fraudulently collected in their names until they receive something in the mail.... Read more →
Archer Daniels Midland is one of the major corporations cited in a new report of companies that paid no taxes in 2020. The Biden Administration's infrastructure plan has ramped up the perennial tax debate between Democrats and Republicans. The White House wants to increase tax collections on companies to pay for the proposal, dubbed The American Jobs Plan. And that approach is getting some support from a recent Institute on Taxation and Economic Policy (ITEP) report. The Washington, D.C. nonprofit found that 55 of the largest U.S. companies paid nothing in federal income taxes last year. The $0 tax payments... Read more →
New York last week became the latest state to legalize recreational marijuana. New Yorkers now can possess up to 3 ounces of cannabis for recreational use. But don't expect to pick up some of that legal weed any time soon. While using marijuana is legal for adults age 21 or older, the process of approving dispensaries and establishing precise regulations and tax rules for cannabis distribution will take a while. 17 cannabis OK locales: Still, the Empire State's move is a big one. New York is the 17th jurisdiction to join the legal cannabis club. The toking fraternity includes 16... Read more →
You lost your job last year and collected unemployment. You knew that the benefits are taxable income, so when you filed your 2020 tax return earlier this year, your calculations made sure that Uncle Sam got his piece of your unemployment money. Then along came the American Rescue Plan Act (ARPA), signed into law on March 11, and its provision excluding a portion of jobless benefits from tax. How do you get your overpaid unemployment taxes back? This week, the Internal Revenue Service followed up on its earlier announcement that filers shouldn't amend their 2020 returns because of the new... Read more →
It's April. You know what that means. Major League Baseball is back! Yep, the return of The Boys of Summer takes top billing this month since the Internal Revenue Service pushed the usual April 15 Tax Day to May 17. I'll be spending this Opening Day doing what I do every year when the professional baseball season starts: watching games. All 30 MLB teams are in action today, so that's a lot of innings to occupy my time. Update: Today's meeting of my East Coast team, the Baltimore Orioles, at the Red Sox's Fenway Park is postponed until Friday due... Read more →
Are you a retiree constantly checking your bank account for your third COVID-19 economic impact payment? The IRS says you should get it next week. The Internal Revenue Service has some good news for the around 30 million Social Security recipients anxiously awaiting the latest COVID relief money You should get your $1,400 economic impact payment, dubbed EIP3, next week. The IRS' precise projection is that most of the third relief amounts, dubbed EIP3, will be sent electronically and show up in the recipients' accounts on April 7. Perpetual payment challenge: Getting coronavirus relief amounts to older individuals has been... Read more →
Ah, college days. Studying, working between and after classes and now trying to avoid becoming a tax scam victim. (Photo by Tim Gouw via Unsplash) Many college students shoehorn jobs into their study schedules to help pay for their continuing educations. In addition to pocketing that cash throughout the year, many of these young workers also look forward at filing time to tax refunds from their jobs. So do crooks. The Internal Revenue Service today warned of an ongoing phishing scam in which the perpetrators are targeting education institutions, including students and staff with email addresses ending in the .edu... Read more →
You've kept a close eye on your nest egg. If some of it is in tax-deferred accounts, required minimum distributions are back in 2021. If you're an older retirement account owner and freaking out because the April deadline for your first required minimum distribution is almost here, take a breath. The convergence of coronavirus pandemic tax considerations and a major retirement law's changes mean that there's no April 1 required withdrawal in 2021. No fooling. But you'll still have to make your regular 2021 RMD by the end of the year. RMD refresher: Let's start with a quick refresher on... Read more →
Updated Wednesday, April 7, 2021 Just days after the Internal Revenue Service's March 17 announcement that it was moving the 2021 tax filing deadline from April 15 to May 17, most states that collect some type of personal income tax followed the federal tax agency's lead. The IRS decided that filers could use more time to file and pay their 2020 taxes since we're all still dealing to some degree with the lingering effects of the COVID-19 pandemic. That "we" includes the IRS, which faces a backlog of 2019 returns (and 2020 filings, too, since the tax season opened in... Read more →
Photo: Ketut Subiyanto from Pexels The Paycheck Protection Program (PPP) was created to help small businesses continue to operate in the face of COVID-19 complications. Its execution, however, has been a mixed bag for many businesses and their tax pros, not always working as smoothly as its creators had hoped. Still, the forgivable loan program has its fans. And those worried about its impeding March 31 expiration can rest easier. The Senate last week agreed to the House bill extending the PPP. President Joe Biden is expected to sign it. When that's done, borrowers will be able to apply for... Read more →
As COVID-19 continues to control to at least some degree our lives, federal and state tax officials are offering tax benefits to those who take steps to control and lessen the effects of the persistent pandemic. Photo: Anna Tarazevich from Pexels If you still itemize deductions, the Internal Revenue Service today announced that you can count a few more purchases toward your Schedule A medical claims. Of course, the additions are because of COVID-19. Specifically, the IRS says in Announcement 2021-7 that the costs of personal protective equipment, aka PPE, purchased for the primary purpose of preventing the spread of... Read more →
New COVID-19 laws have been a lifeline for many individuals and businesses as the United States. They've also created new opportunities for crooks. The Internal Revenue Service, specifically its Criminal Investigation (CI) Division, is well aware of the increased tax-related coronavirus crimes. To mark the one-year anniversary of the Coronavirus Aid, Relief and Economic Security (CARES) Act, CI officials today discussed the unit's success in combatting fraud related to the Economic Impact Payments, Paycheck Protection Program (PPP) loans and claims of the Employee Retention Credit. The CI's commemoration is particularly timely. It comes just one day after a Texas man... Read more →